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2015 Edelman Trust Barometer Executive Summary

2015

Edelman Trust Barometer Executive Summary

2015 Edelman Trust Barometer Executive Summary
2015 Edelman Trust Barometer Executive Summary

EARNING THE RIGHT TO INNOVATE

2

EARNING THE RIGHT TO INNOVATE 2 For the past 15 years, the Edelman Trust Barometer has

For the past 15 years, the Edelman Trust Barometer has tracked trust in the global institutions of business, gov- ernment, media and non-governmental organizations (NGOs). There have been long cycle changes, including the inexora- ble rise in trust in NGOs, a gradual ebbing of trust in the media, the fall from grace then gradual recovery of trust in business and a plunge of trust in government due to stalemate and perceived incapacity. In the period prior to the Great Recession, there was an exchange of trust among the four institutions. For example, in the early 2000s, we saw a rise in trust in non-governmental organizations that filled the gap left by loss of trust in business and government.

But now we see an evaporation of trust across all institutions, as if no one has the answers to the unpredictable and unimaginable events of 2014. For the first time, two-thirds of the 27 nations we survey (general population data) fall into the “distruster” category. The horrific spread of Ebola in Western Africa, the disappearance of Malaysia Airlines 370 plus two subsequent major air disasters, the arrests of top Chinese government officials on corruption charges, the foreign exchange rate rigging by six of the world’s largest banks and the constant drumbeat of data breaches, most recently from Sony Pictures, have shaken confidence in all institutions.

There is a new factor depressing trust: the rapid implementation of new technologies that are changing everyday life, from food to fuel to finance. This will shock many entrepreneurs, including Jeff Bezos of Amazon, who said, “New inventions and things that cus- tomers like are usually good for society.” Not so fast, Mr. Bezos. The 2015 Trust Barometer has uncovered a profound concern about the pace of change. By a two-to-one margin, respondents in all nations feel the new developments in business are going too fast and there is not adequate testing. Even worse, 54 percent say business growth or greed/money are the real impetuses behind innovation – that’s two times more than those who say business innovates because of a desire to make the world a better place or improve people’s lives.

The greatest concerns are about genetically modified foods and hydraulic fracturing (trust levels in the 30 percent and 40 percent range), with somewhat more confidence in personal health trackers (69 percent), electronic payments and cloud computing (trust levels in the 50 percent range). The industries charged with implementing these new technologies have a clear vote of no confidence. The food business, for example, is trusted by only a third of respon- dents to manage genetic modification in a responsible manner. The energy industry is trusted by only 48 percent to implement fracking. There is a desire for more government regulation of these develop- ments by a four-to-one margin, but less than half have confidence in government to do it effectively.

half have confidence in government to do it effectively. The Trust Barometer confirms a direct correlation

The Trust Barometer confirms a direct correlation between the trust level in a country and its willingness to accept these innovations. At the top of the list of trusters are the United Arab Emirates (UAE), China, India and Indonesia. At the bottom are several nations in Europe including Germany, France and Spain, plus Japan and Korea. There is a profound difference between the attitudes in developed and developing worlds, with the greater acceptance of the technological innovations in developing markets (77 percent versus 44 percent).

Business sees innovation as imperative to competitiveness but

fails to grasp the underlying problem of resistance based on fear

of

the unknown. The source of anxiety in this new age of disruption

is

lack of understanding. There are huge consumer benefits from

the sharing economy, exemplified by Airbnb and Uber, in providing alternatives to hotel stays and car rentals. Entertainment program- ming streamed over the web by Netflix makes content available on demand. Oil prices have collapsed, from over $100 per barrel, to $50 per barrel, in the past year as hydraulic fracturing and other energy production technologies provide new sources of supply. Yet

the consequences are being glossed over, from risk to environment, privacy violations, and loss of jobs in disrupted industries.

Not since the Industrial Revolution in the 1800s have we observed such rapid change. Protest movements at that time were led by individuals, journalists or unions to mobilize resistance to uncontrolled innovation. The first automobiles on the streets in Europe were required to have people walking in front of them with red flags to warn pedestrians. John Ruskin organized an effort in the 1870s in the U.K. to bring back traditional rural handicrafts, against the woolens mills of the big cities. In his 1726 master- piece “Gulliver’s Travels,” Jonathan Swift mercilessly critiques the scientists who try to extract sunbeams from cucumbers or convert feces to food. This was his way of lampooning the Royal Society of London for Improving Natural Knowledge and its fantastical notions. Upton Sinclair’s book, “The Jungle” at the turn of the century was a graphic depiction of the desperate lives of immigrants toiling in un- sanitary slaughterhouses in Chicago, uncovering the dangers in the food supply chain. In every case, government responded to popular protests and media outcry against unregulated business innovation.

There are modern analogs to these protests. The city government

in Paris has banned Uber in the wake of a strike by local cab driv-

ers that crippled the city. The Attorney General of New York State has claimed that 70 percent of Airbnb’s listings in New York City

violate the law and that the company has made $40 million on illegal listings. Fracking is banned in several European nations. Electronic wallets, such as Apple Pay, were barred by important

retailers. Innovation through data collection is being demonized.

A New York Times op-ed piece by a Northwestern University

professor, Brayden King, argued, “We use these apps and websites because of their benefits…While we gain from digital connectivity,

TRUST IN BUSINESS INNOVATION:

PACE IS TOO FAST BY A TWO-TO-ONE MARGIN

The pace of development and change in business and industry today is …

51% Too Fast

28% Too Slow

19% Just Right

today is … 51% Too Fast 28% Too Slow 19% Just Right the accompanying invasion into

the accompanying invasion into our private lives makes our personal data ripe for abuse…we need to know where our data is going and how it’s used.”

The important insight for companies seeking to implement innovative technologies is that the traditional game plan used for the past decade will not work. The government is an ineffectual regulator, slow to establish an acceptable framework within which business can operate. The partnership with NGOs, even with celebrity activation, is not sufficient. The CEO taking the lead, promising efficiency and efficacy is not working. In a world of dispersed authority, a new compact of trust must be forged between the individual and the corporation. The individual must feel empowered to speak out, to be the other half of the innovation engine along with the genius programmer or scientist, to be a key part of the process of accepting of the new.

How companies do this is as follows. First, be transparent. We know from the 2015 Trust Barometer that the number one way to add trust in the fast-changing marketplace is to have business make test results publicly available for review (80 percent) or to have a partnership with an academic institution (75 percent). Transparency becomes the fuel for discussion of innovation, the rational backbone.

Second, demonstrate personal and societal benefits from innovation. There must be a new rela- tionship of equality between the company and the individual, who agrees to surrender elements of privacy in order to achieve better service while maintaining the right to opt out. The broader objective should be a better world, as seen in the 81 percent of respondents who believe that business can both make a profit and improve society. The smart company will cultivate the new power of interested individuals who seek to collaborate toward a common purpose, so that marketing becomes a movement.

Table of Contents

The State of Trust

page 4

Trust in Media

page 5

Trust in Business

page 6

Trust in Innovation

page 8

Building Trust

page 10

Toward Trusted Innovation

page 11

Professor Klaus Schwab, founder and chairman of the World Economic Forum, wrote, “There are four prerequisites of the company’s survival; profitability, growth, risk protection and earn- ing public trust.” Schwab perceptively argues that the corporation, pressed by investors, has leaned toward profitability and growth but now must re-orient to risk protection and the regaining of trust. “Now it is time to minimize risk and build trust by meeting legitimate expectations of all their stakeholders…to find solutions to today’s most pressing social problems.”

Innovation should be a trust accelerator, but at the moment is not seen as entirely positive. To invent is not enough. Companies need to demonstrate that innovations are safe based on in- dependent research. There must be a commitment to evolve the product based on consumer experience and feedback. The new product or service must be shown to be good for society, with transparency on the results of the innovation. We will not soon see an uptick in attitudes towards institutions. Therefore, if innovation is the lifeblood of the modern corporation, business must move beyond the WHAT to explain the WHY and the HOW. In the “Merchant of Venice,” William Shakespeare writes, “If to do were as easy as to know what were good to do, chapels had been churches and poor men’s cottages princes’ palaces.” In this moment, business must recognize the validity of this distinction and be sure that all of its innovation is seen as “good to do,” not just for the company but for the individual user and for society at large.

the company but for the individual user and for society at large. President and CEO, Edelman

President and CEO, Edelman

THE STATE OF TRUST

Three out of four institutions lose the global public’s trust

4

Global Trust Erodes

Trust in business, media and even NGOs suffered over the last year, leaving government as the lone institution to experience a slight uptick in public trust. It was a year of the unexpected and unimaginable—from a disappearing aircraft to a seemingly unstoppable pandemic to a rash of privacy and se- curity breaches. The consequence was the dissolution of con- fidence and the end of an era in which trust in business had been on a steady and upward trajectory since the end of the Great Recession.

In 2015, the number of trusting countries fell to the lowest level ever recorded by the Edelman Trust Barometer, with in- formed publics in only six of 27 countries surveyed expressing trust levels above 60 percent. Once trusting countries, such as Malaysia and Canada, fell into neutral terrain, and the U.K., South Africa, Hong Kong and South Korea slid from neutral to distrusting status. Among the general public, the trust deficit is even more pronounced, with nearly two-thirds of countries falling into the distruster category. While still maintaining their trust- ing status, the UAE, China, India and Indonesia all registered precipitous drops among the general population (-16, -12, -11, and -11 points, respectively).

THE EVAPORATION OF TRUST: NGOS, BUSINESS, MEDIA ALL DECLINE

Trust in the four institutions of government, business, media and NGOs, 2014 vs. 2015

66% 63% # 1 NGOs 2014 2015 53% 51% # 3 MEDIA 2014 2015
66%
63%
# 1
NGOs
2014
2015
53%
51%
# 3
MEDIA
2014
2015
59% 57% # 2 BUSINESS 2014 2015 45% 48% # 4 GOVERNMENT 2014 2015
59%
57%
# 2
BUSINESS
2014
2015
45%
48%
# 4
GOVERNMENT
2014
2015

Note: All charts based on Informed Public 27-country global data, unless otherwise noted

Public 27-country global data, unless otherwise noted Government Gains, NGO Declines Government was the only

Government Gains, NGO Declines

Government was the only institution to gain trust in 2015, driven by improvements in 16 countries, including India, which recorded a nearly 30 percentage point gain; Russia, with a 27 percent gain; and Indonesia, with a 19 percent gain. Yet despite its overall rise, the fact remains that government is still the least trusted institution globally. Informed publics in 19 of 27 countries distrust govern- ment to do what is right.

At the other end of the spectrum, NGOs saw the largest decline in trust. NGOs maintained their status as the most trusted institution, but what is clear is that the trust is fading. In 19 of 27 countries, trust in NGOs fell or remained at equal levels to the previous year. Only in the UAE, Indonesia, France, Brazil, the U.S., Italy, Spain and Poland did NGOs record slight upticks.

THE TRUST INDEX

Number of truster countries at an all-time low

 

2015

GLOBAL

55

UAE

84

India

79

Indonesia

78

China

75

Singapore

65

Netherlands

64

Brazil

59

Mexico

59

Malaysia

56

Canada

53

Australia

52

France

52

U.S.

52

Germany

50

Italy

48

S.

Africa

48

Hong Kong

47

S.

Korea

47

U.K.

46

Argentina

45

Poland

45

Russia

45

Spain

45

Sweden

45

Turkey

40

Ireland

37

Japan

37

TRUSTERS from 30% to 22% in 201545 Spain 45 Sweden 45 Turkey 40 Ireland 37 Japan 37 DISTRUSTERS from 33% to 48%

Turkey 40 Ireland 37 Japan 37 TRUSTERS from 30% to 22% in 2015 DISTRUSTERS from 33%

DISTRUSTERS

from 33% to 48% in 2015

TRUST IN MEDIA AND THE NEW CONTENT CREATORS

The story for media in 2015 was one not only of waning trust, but also one of the continuing dispersion of influence, from traditional to social and hybrid sources. In 15 countries, media experienced declines, with some as sharp as 18 percent (Hong Kong), 14 per- cent (Argentina) and 11 percent (Canada and Singapore). While trust in media increased in 12 countries, no country registered gains as great as these losses. Years of newspaper layoffs and staff buyouts are taking their toll on public trust.

Search Engines Surge

As exemplified by the rise of Amazon into the content program- ming game, the continued popularity of Netflix and others, and the success of native entrants such as BuzzFeed, media faces new participants and competitors for share of influence and voice. For the first time, search engines are now the most trusted source for general news and information among the informed public, surpassing traditional media by two percentage points. The gap in trust between traditional and digital sources of media is even more pronounced among Millennials; 72 percent of Millennials say online search engines are their most trusted source of infor- mation, as compared to 64 percent among the larger, informed public population.

Not only are search engines now more trusted, they also are the first source for general business information, continuing a trend first witnessed in 2013 when the Barometer showed search en- gines rising to parallel prominence with newspapers. Newspapers as a first source for general information, as well as for breaking news and as a source to validate news about business, continue to decline in influence, whereas online search has grown or remained flat. In tandem, television as a source for information, breaking

MEDIA SOURCES: SEARCH ENGINES NOW USED FIRST AND MOST

Sources used for information about business (20-country global data)

NEWSPAPERS TELEVISION ONLINE SEARCH The First Source for General Information The First Source for Breaking
NEWSPAPERS
TELEVISION
ONLINE SEARCH
The First Source for
General Information
The First Source for
Breaking News
31%
29%
28%
27%
27%
25%
25%
27%
27%
25%
26%
24%
22%
22%
21%
20%
19%
18%
Source Used Most to Confirm/Validate News 37% 36% 34% 22% 20% 20% 19% 19% 18%
Source Used Most to
Confirm/Validate News
37%
36%
34%
22%
20%
20%
19%
19%
18%

2013

2014

2015

2013

2014

2015

2013

2014

2015

news and as a news validator has also declined or remained flat. The net effect is that today, television and online search are now near evenly tied as a first source for breaking news about busi- ness. Almost gone are the days when television was the central lifeline for information during a national or global disaster. As far as validating a story, nearly 20 percent more go online than turn to a newspaper or television.

Interestingly, when it comes to creating content for social net- working sites and other online-only information sources, it is not journalists who are among the most trusted but one’s own family and friends. In fact, a company creating its own content (if one uses the company and or its products) is a more trusted author than a journalist, or even an NGO.

MEDIA SOURCES: SEARCH ENGINES NOW MOST TRUSTED

Trust in each source for general news and information (20-country global data)

67% 65% 63% 62% 63% 60%
67%
65%
63%
62%
63%
60%

64%

62%

53% 53% 52% 50% 48% 45% 47% 45% 43% 44% 43% 42% 2012 2013 2014
53%
53%
52%
50%
48%
45%
47%
45%
43%
44%
43%
42%
2012
2013
2014
2015

Millennials Are Even More Trusting Of Digital Media

Online Search

72% (+8)

Engines

Traditional Media

64% (+2)

Hybrid Media

63% (+10)

Social Media

59% (+11)

Owned Media

57% (+10)

2015 | Trust Barometer

2015

Trust Barometer

|

5

Turkey

Germany

Korea

Australia

Russia

Argentina

Canada

Japan

Sweden

Ireland

Hong Kong

S.

TRUST IN BUSINESS: THE END OF AN ERA

For the first time since the end of the Great Recession, trust in business faltered, signaling the finale of an era of recovery for business. Marked by declines in trust in the once impenetrable technology industry, trust levels in business decreased in 16 of 27 countries. The majority of countries now sit below 50 per- cent with regard to trust in business. Leading the declines were Canada, Argentina, Germany, Australia and Singapore, which all witnessed double-digits declines in trust in 2015 (-15, -12, -12, -11, and -10 points, respectively).

Four Factors Shape Trust in Business

As the Trust Barometer has evidenced over time, four factors inherently impact trust in business: industry sector, enterprise type, country of origin and leadership. Since 2008, all have shown similar patterns of a post-recovery increase, followed by new declines in the last 12 months.

Industry Sectors

Technology remains the most trusted of all industry sectors at 78 percent. However, declines across all technology-based indus- tries were evident in 2015. Privacy and security breaches—such as the high-profile cyber-attack at Sony Pictures and the hacking of credit card data at several big-name retailers—have weakened trust in both technology products and the sector. Across 74

percent of countries, trust in the consumer electronics sector

In 67 percent of countries, trust in telecommunications

decreased, and in 70 percent of countries trust in technology

in general sank.

fell.

Country of Origin

A company’s headquarters location matters deeply when it

comes to trust. Following a pattern seen in previous years, companies headquartered in BRIC countries remain among the most distrusted of businesses. Brazil, China, Russia, India and Mexico all recorded trust levels well below 50 percent (38

percent, 36 percent, 35 percent, 34 percent, and 31 percent, respectively), a stark contrast to countries such as Sweden, Canada, Germany and Switzerland that registered as high as 76 percent.

The trust challenge is particularly acute for developing country- based multinational companies seeking to do business in a developed country. Whereas 57 percent of informed publics in a developing country would be inclined to trust such a company,

a mere 22 percent in a developed country say they would trust a

developing country multinational doing business in their country.

Specifically, only 30 percent of respondents in developed mar- kets would trust a Brazilian-based company to make a major

TRUST IN BUSINESS: HALF BELOW 50%

Trust in business, 2014 vs. 2015

2014

2015

Increased Trust in 11 Countries

Lower Trust in 16 Countries

6

85%

84%

82% 82% 79% 77% 73% 73% 72% 72% 71% 70% 70% 67% 66% 64% 62%
82%
82%
79%
77%
73%
73%
72%
72%
71%
70%
70%
67%
66%
64%
62%
61%
63%
60%
59%
59%
58%
57%
57%
56%
58%
54%
53%
53%
51%
50 %
52%
48%
49%
48%
48%
45%
49%
47%
45%
46%
43%
45%
45%
45%
45%
43%
43%
42% 41%
41%
39%
38%
38%
36%

84%

Global UAE Indonesia India Brazil Netherlanlands S. Africa U.S. Italy Poland France Spain Mexico China
Global
UAE
Indonesia
India
Brazil
Netherlanlands
S.
Africa
U.S.
Italy
Poland
France
Spain
Mexico
China
Malaysia
Singapore
U.K.

OF RECOVERY

investment in a new plant or office in their country—in spite of the ostensible job creation impact it would have. In developing markets, the trust level in a Brazilian-based company’s plan investment is twice as high.

Enterprise Type

For the second year, the Edelman Trust Barometer asked informed publics about their levels of trust in business based on their enterprise structure. Trust varies among different types of business—and developed versus developing countries exhibit very different tendencies with regard to whom they trust. In developed countries, family- owned businesses carry a trust premium of nearly 30 percentage points when compared to big business. In contrast, in developing countries, big business is more trusted than a family-owned enterprise by six percentage points. But, a family-owned business is only slightly more trusted than a state-owned enterprise.

Leadership

Academics, industry experts and technical experts remain the most credible spokes- people for business, standing in stark contrast to CEOs, who are now nearly half as trusted, with trust levels at 43 percent. In three-quarters of countries, CEOs are not viewed as credible spokespeople. They rank only above a government official or

regulator, having fallen a full nine points from

a high in 2011. The trust deficit for CEOs is

particularly pronounced in the developed world, where trust levels hover 10 points below the global average. Here, 70 percent of respon- dents do not perceive the CEO to be a believable source of information about a company. The

picture is far different in the developing world, where CEO credibility trends 30 points higher,

at 61 percent.

INDUSTRY SECTORS:

TECHNOLOGY-BASED INDUSTRIES DECLINE

Trust in industries 2015, declines compared to 2014

78% 75% 71% 67% 67% 66% 63% 63% 61% 60% 60% 57% 54% 53% 51%
78% 75% 71% 67% 67%
66% 63% 63%
61% 60% 60%
57% 54% 53% 51%
in
in
in
70%
74%
67%
of
of
of
Ctrys.
Ctrys.
Ctrys.

ENTERPRISE TYPE: DEVELOPING COUNTRIES MORE OPEN TO BIG BUSINESS

Trust in different types of business, developed (U.S., U.K., Germany, France, Japan) vs. developing countries (China, India, Russia, Mexico, Brazil)

developing countries (China, India, Russia, Mexico, Brazil) DEVELOPED COUNTRIES 44% 4 5 % 72% State-owned Big

DEVELOPED COUNTRIES

44%

45%

72%

State-owned

Big business

Family-owned

44% 4 5 % 72% State-owned Big b usiness Family-owned DEVELOPING COUNTRIES 75% 69% 64% State-owned

DEVELOPING COUNTRIES

75% 69% 64% State-owned Big business Family-owned
75%
69%
64%
State-owned
Big business
Family-owned

LEADERSHIP: EXPERTS AND “A PERSON LIKE YOURSELF” TWICE AS CREDIBLE AS CEOS

Credibility of spokespersons, 2014 vs. 2015

2014 2015
2014
2015
CEOS Credibility of spokespersons, 2014 vs. 2015 2014 2015 More Trust Less Trust 70% 70% 68%

More Trust

More Trust
More Trust Less Trust

Less TrustMore Trust

70% 70% 68% 67% 63% 63% 56% 55% 54% 53% 53% 49% 46% 43% 38%
70%
70%
68%
67%
63%
63%
56%
55%
54%
53%
53%
49%
46%
43%
38%
37%

Academic or

Company

A Person Like

NGO

Financial or

Regular

CEO

Government

Industry Expert

Technical Expert

Yourself

Representative

Industry Analyst

Employee

Official or

 

Regulator

TRUST IN INNOVATION

For the first time, the Edelman Trust Barometer asked informed publics about their levels of trust in innovation. The findings not only shed light on public perceptions around the pace of change, but also carry enormous implications for the future of trust in business.

Overwhelmingly, the Barometer reveals that today’s pace of development and change by business and industry is perceived as being too fast—51 percent say innovation is too fast; 19 percent feel it is just right.

Trust in Innovation Varies by Region and Development

When asked about specific innovations, however, trust levels vary wildly. Trust in electronic and mobile payments is

69 percent, as compared to trust in genetically modified foods,

which lingers just above 30 percent. Put another way, while nearly 70 percent of people trust electronic payments, nearly

70 percent also distrust genetically modified foods.

Trust in specific innovations also differs across regions. Perhaps not surprisingly, in the developing world, where business relies far more on the use of mobile payments, trust in electronic payments soars to 83 percent. Generally, trust in new innovations is far greater in developing countries than it is in developed countries.

Interestingly, entrenched trust in a particular industry sec- tor does not assure trust in that industry’s particular innova- tion. As case in point, while the technology industry carries far greater trust than the financial services industry, the financial services industry is slightly more trusted to develop and implement electronic payments than the technology in- dustry is trusted to develop and implement cloud computing. While the food and beverage industry has a 67 percent trust level, trust plummets to 35 percent when it comes to the public’s confidence in the industry to develop and implement genetically modified foods.

Transparency and Third-Party Validation Are Essential

Business is not without means to foster trust in innovation, however. Respondents indicated a clear set of actions that would increase trust in an industry to implement technology changes. Predominantly, transparency in the form of making test results publically available for review would boost trust. Partnering with credible third parties, including academic institu- tions and NGOs, as well as running a clinical trial or beta test, all have positive impacts on the public’s acceptance of new innovations. The bottom line for business is that knowledge and understanding beget trust.

TRUST IN INNOVATION:

TRANSPARENCY AND 3RD-PARTY VALIDATION ARE ESSENTIAL

Actions that increase trust in industry to implement technology changes

8

Make test results available publicly for review

80%

Partner with an academic institution

75%

Run a clinical trial or beta test

71%

Partner with an NGO

63%

Partner with government

55%

with an NGO 6 3 % Partner with government 5 5 % 55% AGREE: New developments
55% AGREE: New developments are not tested enough
55% AGREE:
New developments
are not tested
enough

BUSINESS INNOVATION: DEVELOPING MARKETS MORE OPEN TO CHANGE

Trust in recent developments in business and industry, developing countries vs. developed countries

83%

industry, developing countries vs. developed countries 83% DEVELOPING COUNTRIES DEVELOPED COUNTRIES 72% 71% … but

DEVELOPING COUNTRIES

countries vs. developed countries 83% DEVELOPING COUNTRIES DEVELOPED COUNTRIES 72% 71% … but do not take

DEVELOPED COUNTRIES

72% 71% … but do not take customers in developing markets for granted. 60% 54%
72%
71%
… but do not take
customers in developing
markets for granted.
60%
54%
53%
45%
50%
39%
37%
31%
+29
+19
+26
+21
+6
Electronic and Mobile
Payments
Electronic and
Cloud Computing
Hydraulic Fracturing
Genetically Modified
Personal Health
Foods

Trackers

BUSINESS INNOVATION: TRUST IN INDUSTRY SECTORS DOES NOT GUARANTEE INNOVATIONS ARE TRUSTED

Trust in industries’ abilities to responsibly develop and release industry-specific developments, compared to trust in industries

developments, compared to trust in industries TRUST INDUSTRY SECTOR TRUST INDUSTRY TO IMPLEMENT EACH

TRUST INDUSTRY SECTOR

compared to trust in industries TRUST INDUSTRY SECTOR TRUST INDUSTRY TO IMPLEMENT EACH DEVELOPMENT Trust in

TRUST INDUSTRY TO IMPLEMENT EACH DEVELOPMENT

Trust in Industry Sector

vs.

Trust in Industry to Innovate

Financial Services 54% Electronic Payments 62% Health 60% Personal Health Trackers 61% Technology 78% Cloud
Financial Services
54%
Electronic Payments
62%
Health
60%
Personal Health Trackers
61%
Technology
78%
Cloud Computing
61%
Energy
60%
Hydraulic Fracturing
48%
Food & Beverage
67%
Genetically Modified Foods
35%

+8

+1

-17

-12

-32

2015

2015

| |

Trust Barometer

Trust Barometer

9

10

BUILDING TRUST

Trust is built through specific attributes, which can be organized into five perfor- mance clusters: integrity, engagement, products and services, purpose and op- erations. Of these clusters, the Edelman Trust Barometer reveals that integrity is most important, followed closely by en- gagement. As in years past, respondents indicated that areas such as excellence in operations or products and services, while important, are simply what is ex- pected.

The trust-building opportunity for busi- ness, therefore, lies squarely in the area of integrity and engagement. These areas encompass actions such as hav- ing ethical business practices, taking responsibility to address issues or crises, having transparent and open business practices, listening to customer needs and feedback, treating employees well, placing customers ahead of profit and communicating frequently on the state of the business—the very qualities also evidenced to build trust in innovation.

What a Company Contributes Affects Trust

Shedding additional light on what it takes to build trust, respondents decisively in- dicated that business shoulders a re- sponsibility to deliver both economic and societal benefits. Specifically, 81 percent agree that a company can take actions that both increase profits and improve the economic and social conditions in the community where it operates. Sev- enty-five percent believe that a company can be more profitable by finding ways to solve social and community problems.

Delving a layer deeper, the Barometer reveals that approximately half of respon- dents attribute increased trust in a busi- ness to the fact that a business enabled them to be a more productive member of society. Forty-seven percent say it is because the business contributed to the greater good. Companies that clearly de- lineate the personal and societal benefits they provide are better positioned to build public trust.

they provide are better positioned to build public trust. Trust Matters The 2015 Trust Barometer findings

Trust Matters

The 2015 Trust Barometer findings reveal that trust carries important implications for future business success. Respondents indicated that trust or lack of trust in a par- ticular company has influenced their behaviors in the previous 12 months. Namely,

80 percent of respondents said that they chose to buy a particular product or service

because they trusted the company behind it. Sixty-three percent said they refused to

purchase a product or service because they distrusted a particular company. As sig-

nificant in an age when peer influence is increasingly consequential, 68 percent said that they have recommended a company that they trusted to a friend or colleague and

58 percent said they shared criticism about a distrusted company.

ENGAGEMENT AND INTEGRITY:

PRIORITY AREAS FOR COMPANIES TO BUILD TRUST

Business importance vs. business performance on 16 trust attributes - global

TRUST-BUILDING OPPORTUNITY QUADRANT UNDER-PERFORMING ON HIGH PRIORITIES HIGH-PERFORMING ON HIGH PRIORITIES INTEGRITY
TRUST-BUILDING OPPORTUNITY
QUADRANT
UNDER-PERFORMING ON HIGH PRIORITIES
HIGH-PERFORMING ON HIGH PRIORITIES
INTEGRITY
PRODUCTS & SERVICES
ENGAGEMENT
PURPOSE
UNDER-PERFORMING ON LOWER EXPECTATIONS
HIGH-PERFORMING ON LOWER PRIORITIES
Stated Performance
Stated Importance

TRUST MATTERS

Behavior based on trust

Actions Taken Over Past 12 Months – Global

Distrusted Companies Trusted Companies -63% Refused to buy products/services Chose to buy products/services -58%
Distrusted Companies
Trusted Companies
-63%
Refused to buy products/services
Chose to buy products/services
-58%
Criticized them to a friend/colleague
Recommended them to a friend/colleague
68%
Paid more for products/services
54%
Shared negative
-37%
Shared positive opinions online
48%
opinions online
Defended company
40%
I sold
-18%
I bought shares
28%
shares

80%

TOWARD TRUSTED INNOVATION

TOWARD TRUSTED INNOVATION The post-Great Recession chapter of recovery in trust has closed, and busi- ness

The post-Great Recession chapter of recovery in trust has closed, and busi- ness is now less trusted than a year ago. This new reality arrives at an ill-timed moment for business. The pace of change has never been faster and innovation has become an even greater imperative for success. Yet, as demonstrated by the Trust Barometer findings, public trust in innovation is no longer implicit. Innovation on its own is not perceived as an inherent demonstra-

tion of forward progress, despite the near reverence for the term.

A majority of respondents (51 percent) say the pace of develop-

ment and change by business and industry in the world is too fast.

In a world of the digitally-empowered citizen, this insight is both

consequential and worrisome. A campaign of resistance mounted by a discontented few can become viral overnight, without a pro- tester leaving a desk chair. The influence of official voices is being trumped in favor of “a person like you or me.” The implications for business success are real.

Equally illuminating and concerning is perception about the impe- tus for innovation. Three times as many informed publics believe innovation today is motivated by greed as by making the world a better place—a reality that lies in direct contrast to the informed

public’s beliefs about the potential for business today. Nearly half

of informed publics cite “contributing to the greater good” as a key

driver of their trust in business, while 51 percent assert business enabling them to be a more productive member of society matters

in this regard. A compelling and related finding shows respondents

expect more from business than operational excellence, with eight

in 10 saying business can take actions that increase profits while

also improving economic and social conditions.

Business is society’s best hope for meaningful and impactful innovation, but a new approach is needed. Our new era—the era of growing skepticism, rapid innovation and an empowered yet wary citizenry—gives rise to the need for Trusted Innovation.

Here is a new formula:

TI= [D + B + I] E

Trusted Innovation = [Discovery + Benefit + Integrity] Engagement

Trusted Innovation is the sum of Discovery, plus Benefit, plus Integrity, exponentially powered by Engagement.

Discovery refers to the innovation that business is uniquely positioned to advance. To Discovery, business brings an unrivaled agility and nimbleness, a multi-stakeholder and often global view, founded in specific expertise no other institution can bring.

Benefit is twofold—both personal and societal, referring to the trust that is placed in companies to address individual needs or challenges, as well as larger, macro-issues facing society.

Integrity is the sum of attributes which build trust in any company, chiefly having ethical business practices, managing risk, treating employees well and operating responsibly as a good corporate citizen.

Engagement is the multiplier factor and refers to the transparency and third-party validation that is integral to innovation. As a case in point, eight in 10 respondents say actions such as making test results publically available for review would boost trust in an industry’s ability to adopt new technology change.

To implement the formula, business must embrace a clear set of actions:

• Solve: Business must continue to apply its unpar- alleled perspective and skill to the world’s great- est problems. Enterprise must bring ideas and products to market that yield benefit, while ensuring the public sees the connection between new develop- ments and societal benefit. Innovative product and service solutions should be recognized by stake- holders as more than profit-drivers.

• Behave: Fundamentally, business must conduct itself with new rigor and self-awareness. A com- mitment to robust relationships, transparency and consistency in reporting, active listening to stakeholders’ concerns and a willingness to modify products and services is required. Ultimately this is an action of leadership, culture and conduct.

• Engage: Business must adopt a new framework rooted in facilitating dialogue, sharing information and fostering collaboration. Realizing that new developments do not speak for themselves, en- terprises must actively engage a broad range of stakeholders to facilitate greater understanding through stories that reach and touch their audi- ences. Business must explain benefits completely, elucidate the technology behind the innovations and communicate its ethical practices in bringing those discoveries to market. A business that does this well is one that invites partnership, encour- ages feedback and interaction and listens openly.

We live in an era where trust must be earned and not managed, where the microscope for transparency is constant, and where business must listen and measure the interactions, intentions and sentiments of shareholders. At the same time, the need and capac- ity for innovation that solves and disrupts has never been greater. Business can lead. For the world to follow—indeed for citizens to help clear the path forward—trusted innovation is the way.

clear the path forward— trusted innovation is the way. President, Practices, Sectors & Offerings 2015 |

President, Practices, Sectors & Offerings

About the Edelman Trust Barometer

The 2015 Edelman Trust Barometer is the firm’s 15th annual trust and credibility survey. The survey was powered by research firm Edelman Berland and consisted of 20-minute online interviews conducted on October 13th – November 24th, 2014. The 2015 Edelman Trust Barometer online survey sampled 27,000 general population respondents with an oversample of 6,000 informed publics ages 25-64 across 27 markets. All informed publics met the following criteria:

college-educated; household income in the top quartile for their age in their country; read or watch business/news media at least several times a week; follow public policy issues in the news at least several times a week. For more information, visit www.edelman.com/trust2015

About Edelman

Edelman is the world’s largest public relations firm, with more than 5,000 employees in 65 cities, as well as affiliates in more than 35 cities. Edelman was named one of Advertising Age’s “A-List Agencies” in both 2010 and 2011, and an “Agency to Watch” in 2014; Adweek’s “2011 PR Agency of the Year;” PRWeek’s “2011 Large PR Agency of the Year;” and The Holmes Report’s “2013 Global Agency of the Year” and its 2012 “Digital Agency of the Year.” Edelman has been awarded seven Cannes Lions including the Grand Prix for PR in 2014. Edelman was named one of the “Best Places to Work” by Advertising Age in 2010 and 2012 and among Glassdoor’s “Best Places to Work” in 2011, 2013 and 2014. Edelman owns specialty firms Edelman Berland (research), Edelman Deportivo (creative), Blue (advertising), BioScience Communications (medical commu- nications) and agency Edelman Significa (Brazil). Visit www.edelman.com for more information.

About Edelman Berland

Edelman Berland is a global, full-service market insights and analytics firm that provides corporate, non-profit and government clients with strategic intelligence to make their communications and engagements with stakeholders the smartest they can be. The firm specializes in measurement, tracking and analysis in reputation, branding and communications. Edelman Berland is part of Edelman, the world’s largest public relations company. Edelman Berland has more than 130 employees in offices around the world. Edelman Berland: Intelligent Engagement.

around the world. Edelman Berland: Intelligent Engagement. Berland Intelligent Engagement On the cover, from top left:
around the world. Edelman Berland: Intelligent Engagement. Berland Intelligent Engagement On the cover, from top left:

Berland

Intelligent Engagement

On the cover, from top left: India’s Prime Minister Narendra Modi: REUTERS/Lucas Jackson; Financial Times article on the forex rigging scandal; Ukrainian tanks: REUTERS/Valentyn Ogirenko; Sony Pictures Entertainment Studios: AP PHOTO/ Damian Dovarganes; Uber: REUTERS/Kai Pfaffenbach; Wall of hope for Malaysia Airlines Flight MH370: REUTERS/Samsul Said; Protester calls for for G20 leaders to address the Ebola issue: REUTERS/Jason Reed